Paying for SGR Fix Proving a Challenge

WASHINGTON -- The price tag for a bill to repeal and replace Medicare's sustainable growth rate (SGR) payment formula could cost significantly more than just repealing it, congressional staffers said.

Lawmakers have worked with greater tenacity this year to repeal the SGR, in part because of a lower price to repeal the formula, which has drawn broad disdain. The Congressional Budget Office (CBO) said earlier this year it would cost $138 billion -- more than $100 billion less than it had estimated in years prior -- to do away with the system.

But the first "repeal and replace" proposal to emerge from the current Congress, which came from the House Energy and Commerce Committee this summer, is believed to add far more to that price tag, making the task of paying for the legislation that much more difficult, the staffers said Wednesday at a background briefing sponsored by the Alliance for Health Reform.

First, Medicare would provide 5 years of 0.5% reimbursement increases each year.

Then, starting in 2019, physicians could choose to report certain quality measures and have traditional fee-for-service payments adjusted based on how they compare with their peers on those measures. Physicians could receive a 1% bonus if they perform well or a 1% penalty in payments if they don't.

The bill cleared the House Energy and Commerce Committee unanimously on July 31, but offered no way to pay for itself.

A CBO spokeswoman said Thursday the office was working on estimating the bill's 10-year cost but couldn't provide a time frame for completion. The congressional staffers didn't say Wednesday what they thought the bill would cost.

But lawmakers and lobbyists have long held that the difficult stumbling block in finally putting the death knell in the SGR will be finding a way to pay for a repeal and replacement in a budget-constrained Washington.

That's why a sizable price tag on H.R. 2810 presents an even larger challenge for its passage, the congressional staffers said.

In the meantime, the Senate Finance Committee and House Ways and Means Committee are still crafting their own versions of the bills, staffers on the committees said, but neither has released legislative language. Each -- unlike the Energy and Commerce bill -- will come with payment options.

The Republican-controlled Ways and Means Committee -- which hopes potentially to use the SGR was an avenue to tackle broader Medicare reforms -- has fielded input on several cost-saving measures. But those ideas are likely to be strongly opposed by Democrats since they increase patient cost-sharing, a move Democrats dislike.

They added there is no hard timeline for getting an SGR bill finally signed into law, but the SGR -- if it's still in place -- would require another annual fix at the end of this year to prevent a round of roughly 25% pay cuts to providers from taking effect.

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